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Is it worth controlling the recommended prices of your brand?

Today, many companies practice planning their pricing policies using recommended prices. But there are also some companies that still think: “Is it worth it to introduce this indicator and what will it give us?”.

To answer this question, first you need to figure out what it is and what purpose it is installed on the market.

Recommended Retail Price (RRP) - This is the price of a product that is considered optimal from the point of view of the manufacturer or supplier for sale to the final consumer.

The reason for the introduction of the RRC for the brand is the need to control the level of prices and sales in general, which will help to avoid such unfair competition as dumping. RRP will allow all partners to receive a stable income and not depend on market fluctuations.

The dangers of not monitoring the RRC:

  •  Lower sellers prices lower than recommended leads to an increase in turnover for one player and crowding out the rest, which also brings chaos, up to the “collapse” of the market.
  •  Higher prices higher than recommended without understanding the market and the elasticity of demand for each product can lead to a decrease in sales in general, which is not beneficial either to the seller or the manufacturer.
  •  The gross profit of both the seller and the manufacturer’s company may eventually be less than for sales at recommended prices.

RRC monitoring is vital for the manufacturer so that it can:

  •  Always control the compliance of stores with recommended prices.
  •  To have a clear idea of the market as a whole, in which the price struggle is being waged for the same products.
  •  Maintain your brand.
  •  Monitor promotions and discounts offered under the brand, as this is a key factor in consumer perception.
  •  Position yourself as a brand of interest to the stores themselves.
  •  Maintain close and profitable relationships for both parties - the brand and the seller.

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